RCom gets minor win in Kolkata High Court in one-time spectrum case

MUMBAI: The Kolkata High Court has allowed Reliance Communications to proceed with liberalisation of its airwaves in the 800 MHz band, without making the bank guarantee for one-time spectrum usage charge.

The company can now pay Rs 5,384 crore to liberalise spectrum in 16 service areas after Thursday's order.

The telecom department has raised a demand of Rs 6,953 crore on the telco for liberalisation of spectrum in 16 circles, which would allow it to offer 4G services and share and trade those airwaves. The amount included a payment of Rs 5,384 crore and submitting a bank guarantee of around Rs 1,569 crore demanded as one-time spectrum usage charge.

In 2013, DoT had charged companies a one-time charge for using spectrum over 6.2 MHz till 2013 and more than 4.4 MHz thereafter.

The overall matter of whether the OTSC demand is legal is pending in various courts.

Meanwhile, Reliance Communications and the Tillman Global Holdings-TPG combine have extended by around 15 days their mutually exclusive talks for the latter to but the entire stake of Anil Ambani-owned telco in its telecom towers unit.

“Some issues need to be sorted out before a conclusive agreement is sealed, but talks are on the right track,” a person familiar with the matter said. “There's a clause in the agreement that the period can be extended if both parties agree, and that's what has been invoked.”

A second person said the talks were stalled on the additional sale of the optic fibre network, which TPG is not agreeing to buy. Yet, financials for the towers remain largely the same.

The parties had entered into an exclusivity agreement, which is valid till January 15, 2016.

RCom has already signed a non-binding agreement to sell its telecom towers to Sanjiv Ahuja-led Tillman and private equity buyout group TPG. RCom had said funds from the sale, estimated at Rs 21,500 crore, will be used to pare its debt of around Rs 40,000 crore.

Reliance Infratel reported revenue of Rs 5,916 crore and an operating profit of Rs 2,398 crore in FY15, a period it had made a net loss of Rs 964 crore.

Under the initial pact, the tower assets held by Reliance Infratel would be transferred to a separate special purpose vehicle that will be 100% owned by the Tillman and TPG combine. Together, Tillman and TPG were to also evaluate the purchase of RCom’s 190,000 km optic fibre network.

On the back of this transaction rests RCom’s plan for a three-way merger of its wireless business with Russia’s Sistema and Malaysia’s Aircel.

RCom on Thursday said its proposal to take over the Indian wireless business of Sistema JSFC have been cleared by the stock exchanges, and the two telcos will now move the courts for further clearances.

RCom is taking over Russian conglomerate Sistema's Indian mobile telephony venture that operates under the MTS brand. The company had said Sistema Shyam Teleservices (SSTL) will hold a 10% equity stake in RCom as a result of the deal. In addition, RCom will assume the liability to pay the government instalments for SSTL's spectrum, amounting to Rs 392 crore per annum for the next 10 years.

The Anil Ambani-owned company is also exploring a merger with Aircel.

RCom’s shares closed 1.1% down at Rs 77.95 on the Bombay Stock Exchange on Thursday.

The scrip had hit a peak of around Rs 86 on December 4 when the exclusive talks on tower sale were announced. But it has taken a beating over the last few sessions after it emerged a couple of days back that the telecom department had raised a demand of Rs 6,953 crore on the telco for liberalisation of spectrum in 16 circles, which would allow it to offer 4G services and share and trade those airwaves. The amount included a payment of Rs 5,384 crore and submitting a bank guarantee of around Rs 1,569 crore demanded as one-time spectrum usage charge.

Separately, RCom initiated contempt proceedings in the apex court against the Department of Telecommunications, blaming it for delaying a spectrum sale that would have enabled dues to be paid to Ericsson and lenders.